IMD pricing reduction dispute to continue on

“Removing R&D cash cow” vs. “Expensive generic expenditure should be cut”

‘Pharmaceutical industry-lawmaker’ vs. ‘Government’ clashes around IMD pricing regulation

Pharmaceutical industry and lawmakers are reprehending the government for not laying down any specific plan, despite their demand for the government to abolish or revise the pricing reduction policy on new incrementally modified drugs (IMDs).

 

The criticism is on the lack of any follow-up action from the government, although Minister of Health and Welfare Park Neung-hoo at the National Assembly annual audit session agreed with the lawmaker’s concern about reducing incrementally modified drug pricing and stated he would revisit the matter.

 

According to the industry sources and a few of lawmakers of the National Assembly Health and Welfare Committee on Dec 29, Ministry of Health and Welfare (MOHW) has not disclosed a detailed policy revision plan as demanded.

 

The industry and the lawmakers claim IMD is a uniquely competitive cash cow and stepping stone for the emerging Korean bio and pharmaceutical industry that would leverage Korea to become a new global pharmaceutical powerhouse.

 

Ultimately, abolishing pricing benefit for IMD would impair pharmaceutical industry’s advancement and their commitment to develop new drug.

 

Such point was clearly made when the Health and Welfare Committee-affiliated Democratic Party lawmakers, Nam In-soon and Oh Jae-sae, questioned Minister Park directly at the National Assembly audit session.

 

The issue fired up the lawmakers and the industry when MOHW issued a notice on the generic pricing regulation revision, which would apply the same early pricing reduction regulation as generic on the IMD to reduce the pricing after maximum three years a same class generic is launched.

 

Although the generic pricing reduction may be inevitable, the industry insists pricing benefit on IMD should be maintained as it is associated as a drug with innovativeness-recognized data.

 

A Health and Welfare Committee lawmaker’s office official pointed out, “The National Assembly audit has raised the same issues on the IMD pricing reduction policy numerous times, and the minister has said he would look into the matter.

 

But the ministry has now followed up with any plan for months now.” “The Special Act on Fostering and Support of Pharmaceutical Industry that passed the National Assembly plenary session clearly provides pricing benefit on IMD.

 

Basically, the government is removing regulations the lawmakers have regulated.

 

Recklessly lowering drug pricing would eventually harm the quality of drug product directly affecting the people’s health.

 

We suspect the recent valsartan contamination issue broke out, partially because the companies were pushed to use competitively low-priced active ingredients due to the past drug pricing reduction,” the official elaborated.

 

A director of drug development department at a medium-sized pharmaceutical company urged, “Fundamentally, we understand the government’s intent and logic behind the pricing reduction.

 

They are trying to reform the Korean pharmaceutical industry’s present business model centering generic.

 

Although we agree with the intent, their actions are too fast and too unrefined.

 

Their message would come across fine regulating only against generics while maintaining the benefit for IMDs.” “The Korean pharmaceutical industry has already well-noted the government’s intent to redirect the industry’s effort on new drug development with the revised generic pricing reduction regulation.

 

It would make a better sense for pharmaceutical industry and government to cooperate and together leap as an emerging pharmaceutical powerhouse than to strictly regulate IMD pricing,” said the director.

 

However, MOHW begs to differ and argues drug pricing regulation is essential for Korea to become a new global pharmaceutical powerhouse.

 

At a recently convened drug pricing-related policy seminar, the ministry reiterated its aim to significantly raise the proportion of new drug expenditure within the National Health Insurance (NHI)-covered drug expenditure breakdown.

 

In other words, the ministry means to significantly cut down the NHI expenditure on expensive generic and IMDs.

 

At a seminar convened last month by Korean Research-based Pharmaceutical Industry Association (KRPIA) about the social value of new drug and management of NHI, MOHW expressed its commitment to shift the NHI expenditure management towards new drug and explained, therefore, regulating the pricing of generic and IMD is unavoidable.

 

A MOHW official at the seminar stated, “Other pharmaceutical powerhouses do not spend as much as Korea does on generics.

 

Off-patent drugs should exit the market and inexpensive generic should fill up the market instead.

 

While we needed to reconstruct the pharmaceutical expenditure structure itself, we happen to have reformed the generic pricing regulation first as a transitional step.” As a result, the pharmaceutical industry and lawmakers, and government would continue to clash about the IMD pricing benefit and regulation.